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Sunday, November 14, 2010

Natural Gas Weekly Technical Outlook For Sunday Nov. 14th

Natural gas edged higher to 4.269 last week but failed to sustain gain and pulled back into prior range. Initial bias remains neutral this week and we'd probably see some sideway trading. But after all, rise from 3.255 is in favor to continue as long as 3.743 support holds. Break of 4.249 will target falling trend line resistance (now at 4.4). However, break of 3.743 support will indicate that rebound is finished and flip bias back to the downside for retesting this low.

In the bigger picture, current development raises the possibility that fall from 6.108 has indeed finished with three waves down to 3.255, and failed 100% projection of 6.108 to 3.81 from 5.194 at 2.896. That is, it's merely a correction to rebound from 2.409. There is no confirmation of reversal yet and key focus will be on mentioned trend line resistance from 6.108, now at around 4.4 level. Sustained break there will likely pave the way the another high above 6.108 in medium term. Though, a break below 3.255 will turn focus back to 2.409 low instead.

In the longer term picture, question remains on whether 2.409 is the long term bottom already. Downside momentum since 6.108 is so far not too convincing and it looks like 2.409 won't be violated even in case of another fall. On the other hand, natural gas is still limited well below 55 weeks EMA and 55 months EMA and there is no confirmation of reversal yet. We'll stay neutral before a break of 5.194 resistance.